Subject to - what to do?

[Paul Montaperto]

Hey Biggerpockets gang! Great to have the opportunity to reach out on such a knowledgable platform for learning. I have been lurking for the past few months and now finally "jumping in" as @Joshua Dorkin put it, fittingly.

My wife and I are excited to be exploring opportunities in the REI business. We have spent the last six months doing a lot of research, reading books, lurking on websites, attending seminars, and networking in our area through people we know connected to real estate as well as attempting to connect with various REIA venues. The wealth of information out there is daunting and rather overwhelming, so we have chosen to focus our efforts in the wholesale arena to get started - makes the most sense for us at this time.

With that said, we have found a motivated seller and are exploring options. I have been told that the numbers in the deal point to a 'subject to' transaction. The balance on the note is about 85% of the ARV based on current comps. While I have tapped into many forums to find out exactly how to structure a subject to deal from beginning to end, I am still uncertain of all the details. Here are my questions (there are probably others I should be asking as well, but its a starting point).....

1. What does the purchase agreement NEED to say?

2. What paperwork is necessary and are there specific time frames in the deal where it must be completed?

3. How do I deal with the lender (JP Morgan and Chase)?

4. Can the property then be sold on the open market or are there restrictions?

5. I have been told lease options are hot in my farm area right now. What are some examples of what that might look like once we acquire the property?

I know it's a lot of "it depends on the situation" type questions, but any guidance or clarity provided will be greatly appreciated. Thanks to all of you for consistently sharing your thoughts and ideas.

Paul